Board And It’s Composition

CA. Bimal R. Bhatt, Ex-Public Interest Director, Vadodara

The Directors of the Company are in a fiduciary position, empowered to oversee the management functions to ensure its effectiveness and enhancement of shareholder value. The Board also provides strategic direction, reviews and approves management’s business objectives and plans.

Today, Boards are operating under far greater scrutiny than ever before. This is against a backdrop of increased economic uncertainty, volatile capital markets, cyber security threats, disruptive technologies, and heightened shareholder activism. The criticality of having robust risk management frameworks cannot be undermined. Boards are being tested on their preparedness to tackle black swan events or ‘unknown unknowns’ and the onslaught of novel Corona Virus (COVID-19) pandemic is a case in point here. Investors are assessing boards on their coping mechanisms and agility to confront unprecedented outcomes. Organizations are being tested on the adaptability of their business models and their ability to expand their risk management horizons.

It is particularly in times of crises that investors gravitate to companies that have well-fortified balance sheets and prudent business practices. Companies that have the pillars of environmental, social, and governance (ESG) norms ingrained in their organisational strategy are better equipped to protect themselves and their stakeholders in challenging times. (Source–Annual Reports)

Ram Charan, Business Coach, Author, and Management Guru says “Boards have to ensure that members have the specific expertise to ask the right questions to make a good CEO better, to affect the company’s choice of short and long-term goals, to judge and approve the strategy and to maintain relationships with stakeholders like activists and regulators”. (Book–OWNING UP)

Broad Areas of Expertise for a Directorship—

Dynamics in the Role of a Director

Post-COVID-19, the world is moving in a distinct trajectory with changing roles of developed, developing, underdeveloped and least-developed countries. Naturally, it’s challenging to have greater focus by all the directors for the sustainable functioning of any company. The board of directors as a cohesive team has to constantly focus and critically evaluate the surrounding environment. Is too large a Board desirable? Say, more than 12 directors?

Agility, integrity, and authenticity should be the hallmark of meaningful and decisive contributions by each of the directors.

Introduction

CA. Bimal R. Bhatt is an Ex-Public Interest Director with over 30 years of experience in industry, consulting, guiding, and mentoring professionals, independent directors, entrepreneurs, etc. Authored a few books like ‘Corporate Governance’, ‘Indian Corporate Citizenship- Case Study on CSR’, etc. Also written articles on Audit Committee Functioning, Cash Flow Management, Business Ethics & Governance, etc.- hitabhatt@gmail.com